There were 562 households out of which 26.9% had children under the age of 18 living with them, 48.0% were married couples living together, 12.1% had a female householder with no husband present, and 34.0% were non-families. 30.6% of all households were made up of individuals and 12.3% had someone living alone who was 65 years of age or older. The average household size was 2.30 and the average family size was 2.83.

In the city the population was spread out with 23.3% under the age of 18, 7.8% from 18 to 24, 24.1% from 25 to 44, 27.5% from 45 to 64, and 17.3% who were 65 years of age or older. The median age was 41 years. For every 100 females there were 93.3 males. For every 100 females age 18 and over, there were 92.3 males.

The median income for a household in the city was $23,749, and the median income for a family was $27,955. Males had a median income of $26,719 versus $19,018 for females. The per capita income for the city was $14,677. About 14.8% of families and 19.4% of the population were below the poverty line, including 18.9% of those under age 18 and 24.2% of those age 65 or over.

For many decades, Carrabelle had the only tertiary sewage treatment facility in the State of Florida, but this may have been updated in recent years.

In 1876 explorer Nathaniel Holmes Bishop of Medford, Massachusetts navigated the Crooked River through the lowlands to the Ochlockonee River. In 1877 Oliver Hudson Kelly, from Massachusetts founded the town and named it Rio Carrabelle. The following year the first U.S. Post office was established with its address as Rio Carrabelle. By 1881 the population was between 500 and 600 people.

The "World's Smallest Police Station" came into being on March 10, 1963. The city had been having problems with tourists making unauthorized long distance phone calls on its police phone. The phone was located in a call box that was bolted to a building at the corner of U.S. 98 and Tallahassee Street. Johnnie Mirabella, St. Joe Telephone's lone Carrabelle employee at the time, first tried moving the call box to another building, but the illegal calls continued.

Mirabella noticed that the policeman would get drenched while answering phone calls when it was raining. So when the telephone company decided to replace its worn out phone booth in front of Burda's Pharmacy with a new one, he decided to solve both problems at once by putting the police phone in the old booth.

With the help of Curly Messer, who was a deputy sheriff at the time, Mirabella moved the phone booth to its current site on U.S. 98. The booth did protect the officers from the elements, but some people still sneaked into it to make long distance calls. Eventually the dial was removed from the phone, making it impossible for tourists to make calls.

But life has not always been easy for the retired St. Joseph Telephone and Telegraph Company phone booth. Vandals have ripped phones out of the booth and shot holes through the glass. It has been knocked over by a pickup truck, a tourist once asked a gas station attendant to help him load it into his vehicle to take it back to Tennessee and it was knocked over and damaged by Hurricane Kate.[8]

Carrabelle has a local history museum which is located in the Marvin Justiss building also known as "Old City Hall" and is open on Friday and Saturday from 10 am to 4 pm for visitors interested in learning about the local history of Carrabelle.